The Financial Action Task Force (FATF) has released new standards that require all cryptocurrency exchanges to share customer data with each other when transferring funds between them. The intergovernmental organisation is focused on combating money laundering and terrorist financing and has released detailed guidance on the subject.
According to CoinDesk, the requirement includes details about originator name, account number (wallet address), physical address or national identity number, beneficiary name and beneficiary account number. FATF has said that they will give countries 12 months to adopt the guidelines with another review set in June 2020.
Apart from sharing customer data, FATF has also recommended other guidelines which seem to be overly stringent from a market standpoint. For instance, one of the recommended rules says that the risks associated with services designed to obfuscate the origin of crypto transfers (possibly hinting at privacy coins) need to be managed and mitigated by the Virtual Asset Service Providers (VASPs). If not, they should not be permitted to engage in such activities. Other strict recommendations stem around licensing requirements, foreign VASPs and sanctioned entities.
Industry experts have warned that such an approach could lead to the shutdown of exchanges and push them off the radar. It will be interesting to see whether India adopts the FATF recommendations. While it is not binding on nations to accept the FATF standards, but not doing so leads to them being put on a blacklist which slows down foreign investment. India has been hinting that it is considering a complete cryptocurrency ban.
The FATF recommendations come ahead of the G20 meeting which will be held on June 28-29 in Japan. The G20 meeting may push for a global cryptocurrency regulatory framework.